CHICAGO — For drycleaning operators looking to grow and outperform their competition, the quickest way may also be the most direct — acquiring that competitor. And right now, some believe the conditions for doing so may be better than they’ve been in years.

A wave of retirements is reshaping the industry. Baby boomers are stepping away from businesses they’ve run for decades, and many don’t have family members lined up to take over. For buyers with the resources and the appetite, that creates an opportunity — but only if they know what to look for before signing on the dotted line.

“For those operators who are looking to grow, I think right now is a very fertile time,” says Kermit Engh, owner of Fashion Cleaners in Omaha, Nebraska, and managing partner of Methods for Management (MfM). “There are a lot of smaller operators who have no exit strategy at all. So, if you’ve got those types of folks in your market, now might be the time to knock on their door and find out if they’ve got a plan.”

Joseph Hebeka has seen that shift firsthand. As vice president of franchise redevelopment for Clean Brands LLC — parent company of the Lapels and Martinizing brands — and owner of Belding Cleaners in Grosse Pointe Park, Michigan, he brings acquisition experience from both the franchise and independent operator sides of the business.

Clean Brands recently launched its Clean Exit program, which identifies independent cleaners looking to sell, acquires and converts them, then places incoming franchisees into turnkey operations. Hebeka, who leads the program, says the pipeline reflects just how many owners are ready to move on.

“Right now, the industry is seeing a huge shift of boomers looking to get out of the industry,” he says. “And a lot of them don’t have other family members who are looking to take over, as we’ve seen historically.”

Robert Strong, president of California’s Country Club Cleaners, has built his business over 40 years through acquisitions of all shapes and sizes — from formal purchases to handshake deals to simply stepping in when a competitor went bankrupt.

“Those are the only ones that succeeded,” Strong says of his acquisitions. “There were a lot of frogs I kissed that never turned into a prince.”

No matter how the acquisition discussion begins, there is one non-negotiable starting point: financial records. Without them, Hebeka says, you’re flying blind.

“Tax returns are No. 1,” he says. “(Clean Brands) signs non-disclosures, and everything’s done professionally. We’re not going to share any information, but if you can’t share your tax returns, that’s definitely a red flag.” Once the returns check out, his team validates everything with supporting documents. “And if it passes the test, we move on to an offer.”

Engh casts an even wider net. “Bank statements, point-of-sale reports and tax returns are pretty much non-negotiable,” he says. “Without those, the seller is hiding something.”

He also points to records most buyers don’t think to request: workers’ compensation histories and unemployment accounts. The latter can actually be a hidden asset.

“The unemployment reserves that have been built up by most companies — the seller can’t get that money back, but it is valuable to the buyer,” Engh says. “A lot of folks don’t even think about that.”

Strong takes a pragmatic approach. “If the guy couldn’t prove to me what the sales were and what his costs were, we couldn’t move forward,” he says. “There were other deals where he couldn’t show me financials on paper, but I did see his volume, and we made the deal happen because I could see that.”

Come back Thursday for Part 2 of this series, where we’ll explore how to determine the actual value of a drycleaning operation.